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BETHESDA, MD-RLJ Development has closed its third private equity real estate fund, a $1.2-billion pool of equity commitments that, when leveraged, will give the privately held firm nearly $4 billion in purchasing power. At least 16 institutional investors have contributed to RLJ Real Estate Fund III LP or RLJ Fund III, including several major public and corporate pension funds, financial institutions and a hospitality entity. Real estate investment bank Presidio Partners represented RLJ in the fund.

RLJ’s strategy is to acquire and develop upscale service hotels with premium brands in urban markets or dense suburban areas near major cities. Last year, for example, for its Fund II it acquired the New York LaGuardia Airport Marriott for $69 million from LaSalle Hotel Properties. RLJ closed Fund II in September 2006 with $743 million of commitments, giving it a total purchasing power of nearly $2.5 billion. Major public and corporate pension funds, financial institutions and a hospitality entity–numbering 15 institutional investors all together–participated in that fund.

RLJ shows every sign of repeated its tried-and-true formula with Fund III with one notable addition: according to the company it is expanding its strategy to include mixed-use investments in target markets. Fund III brings the total equity under management at RLJ to $2.2 billion, according to Robert Johnson, chairman and CEO of RLJ. “We are proud to close our third fund and delighted with the overwhelming response from the institutional investment community,” Johnson, who is also founder of BET and owner of the NBA Charlotte Bobcats, says. “I particularly want to thank Jeffery Immelt, chairman and CEO of General Electric Co., for making GE, through its General Electric Pension Trust and General Electric Real Estate Equities Inc., one of our foundation investors.”

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